Iran on Tuesday threatened to cut off electricity to the autonomous Azerbaijani republic of Nakhichevan over non-payment of bills, the official IRNA news agency reported. Nakhichevan's power flow from Iran has been interrupted several times in the past few years for financial reasons, IRNA said, citing a local official.

Baku and Tehran concluded an agreement in December 1992 for Iran to provide Azerbaijan with 600 million kilowatts of electricity. Some 60 percent of Nakhichevan's electricity supply comes from Iran, which has agreed to provide 880 megawatts of electricity each day.

But Tehran's energy ministry has repeatedly said it had no obligations to uphold the agreement if Azerbaijan did not respect its financial commitments. The two neighbours share Islamic and cultural affinities, but relations have been strained in recent years, particularly over the sharing of the resource-rich Caspian Sea.

Iran has also singled out Baku for its friendly relations with the United States and Israel. Azerbaijan has secured a number of major energy contracts with US and other foreign firms since the breakup of the former Soviet Union.